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HRMT20022
HRM in the Global Environment
Study Guide
Edition 2009, T2
Published by the
Division of Teaching & Learning Services
CQUniversity Australia
Rockhampton, Queensland.
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Introduction 7
Learning objectives 8
Summary 11
References 11
Introduction 13
Learning objectives 13
Expatriate ‘failure’ 14
Expatriate adjustment 15
Foreign postings 22
Summary 26
References 26
Introduction 31
Learning objectives 31
Orientation programs 31
Summary 38
References 39
Introduction 43
Learning objectives 43
Summary 48
References 49
Module 5—International compensation 51
Introduction 51
Learning objectives 51
Summary 60
References 60
Introduction 63
Learning objectives 63
Repatriation 64
Relocation programs 67
Summary 69
References 70
Introduction 73
Learning objectives 73
Australia 74
New Zealand 78
Summary 79
References 80
Introduction 81
Learning objectives 81
China 81
Summary 82
References 83
Introduction 85
Learning objectives 85
Japan 85
Summary 87
References 88
Module 10—HRM in the Asian context: Thailand 89
Introduction 89
Learning objectives 89
Thailand 89
Summary 91
References 91
Introduction 93
Learning objectives 93
India 93
Summary 94
References 95
Introduction 97
Learning objectives 97
Summary 100
References 101
Module 1—Introduction: Global Human
Resource Management
Introduction
Faced with an increasingly globalised economy and ever intensifying
competition in world markets, today’s corporate executives, must, of
necessity, develop an international business perspective. (Blocklyn 1989)
These quotations date from over a decade ago, and ought to give us pause for
thought. Are they still true for global business, and thus for Human Resources
(HR) management?
In the 1990s, not only has the practice of IHRM become more sophisticated, but
research into its policy and practice has become established. It has a developing
body of research and practice which is regularly considered at dedicated
conferences, and published in general management as well as HRM journals.
Increasingly, international HRM is being taught in university faculties of business
management courses, and management MBA graduates, as well as graduates in
HRM, are now more frequently aware of the issues involved, and the functions of
HRM in an international context.
HRMT20022 - Module 1 - Page 8
Linguistic and conceptual tools
Before proceeding further, it is appropriate to define some common terms in
IHRM (Gilroy, Noer & Spoor 1979):
Reviewing the history of how IHRM has been conceptualised, Weber and Festing
observe that ‘without considering the product or any environmental factors, such
as the extent and kind of competition in the industry, the geocentric approach is
seen as the goal of every internationally-oriented firm’ (Weber & Festing 1994).
They submit that there is no longer one best way for the HR function in globally
Review questions
Question 1–1
Question 1–2
References
Adler, NJ & Ghadar, F 1990, ‘Strategic human resource management: a global
perspective’, in R Pieper (ed.), Human resource management: an international
perspective, Walter de Gruyter, Berlin 1990, pp. 235–260.
Capelli, P & Crocker, HA 1996, ‘Distinctive human resources are firms’ core
competencies, Organisational Dynamics, vol. 24, no. 3, pp. 7–22.
Ibid., p. 11.
Porter, ME 1990, The competitive advantage of nations, The Free Press, New
York, p. 14.
Weber, W & Festing, M 1994, ‘Essentials and limits for IHRM practices’,
Proceedings of the Fourth Conference on International Human Resource
Management, Gold Coast, Australia, 5–8 July.
Learning objectives
After studying this module, you should:
Research has recently suggested that the high failure rate of expatriates on
international assignment, and the subsequent difficulties and financial expense
of repatriating these managers, has made the alternative of employing host-
country managers more attractive to multinational companies.
A further argument cited by some host countries is that expatriates deny their
own people the essential jobs and training they need, and some critics have
suggested that ‘the expatriate’ is still seen in certain countries as a historical
throw-back to the privileged and frequently racist elite of colonial times.
If there is a strong feeling of nationalism in the host country, having home
country nationals as managers can make the subsidiary seem very foreign
indeed (Ball & McCulloch 1996).
In spite of all the reasons to the contrary, the evidence is that many companies
still prefer to expatriate their own home-country managers to run their
international operations, at least in the early stages of the operations.
One reason commonly given is that the parent company prefers to have someone
in the job whom it knows and who knows the headquarters way of doing things,
in addition to having someone who is demonstrably skilled and knowledgeable
about the technical aspects of the job. Another reason given relates to the
perceived need for the development of managers from the parent company,
through international assignments. There is every indication that a detailed
examination of the trends in this area of International HRM practice is required.
Expatriate ‘failure’
As business becomes globalised, many more Australian companies than ever
before are sending staff to overseas postings. The evidence from American
and European studies indicates that this is both expensive and risky (Bartlett
et. al 1990; Black et. al 1991; Brewster & Larsen 1992). The magnitude of the
problem being faced by many international organisations can be grasped from
the number of expatriate assignments judged to have failed (Shilling 1993).
With national variations, it has been estimated that twenty to fifty percent
of personnel sent abroad return prematurely from their overseas assignment
(Distefano & Lane 1992). Further, as many as 50 percent of expatriates who
do not return prematurely function at a low level of effectiveness (Black &
Mendenhall 1990). These are presumably the result of selection errors, or of
ineffective management policies and/or practices.
Expatriate adjustment
Organisations have an obvious vested interest in assisting their expatriates
to adjust to their environments as quickly and effectively as possible. Much
can be learned from studies of personal relocation, of which expatriation is a
special case.
These are proposed as among the factors which may be important for the
adjustment of the expatriate. A six-month sideways transfer, alone, to an
unknown, less developed, and distant country where language, customs, and
climate are arduous, is likely to be a very different experience from a sojourn
in a pleasant country with similar language and customs, accompanied by
one’s spouse and children.
The ‘morbidity’ for dual career couples and families related to international
relocation is reputedly high (Hamill 1989). Coyle’s Australian study reported
that 52 percent of spouses suffered increased physical symptoms of stress after
moving, and 28 percent reported a decline in health (Coyle 1988). Worries
about ‘loss of social contacts’ and ‘problems with family property’ figured
importantly in relocations, along with ‘problems of spousal employment’ and
‘worries about children’s educational needs’ (Munton & Forster 1990, pp.
75–81).
The inability of expatriate managers to adjust to the host culture’s social and
business environment is costly in terms of management performance and the
productivity in the overseas operation (Hogan & Goodson 1990). Just how
successfully an expatriate adjusts to ‘the threat and challenge of people who
are different’ (Jenkins 1975) is determined by a multivariate process. The
need for a comprehensive consideration was pointed to by Mendenhall and
Oddou (1985), in terms of four dimensions of the adjustment process in which
the ability to adapt is proposed as strongly influential in the outcome of an
international assignment:
Host-country managers
Without this, there can be a negative effect on host country staff morale, with
senior staff knowing that their chances of promotion to top local management are
slim (although, of course, they may be promoted as expatriates to other countries,
or spend time at corporate headquarters, or offered training in higher technology
as a prelude to promotion, etc.). Some firms report less costs in bringing HCNs to
headquarters for a year’s training and acculturation, prior to appointment back in the
host country, than is carried for assigning an expatriate (Laabs 1991).
A source of potential difficulty for the HCN is the need for comprehensive
training in order to avoid the ‘we-them’ split that may occur between parent
country headquarters and the culturally separate host-country operation, where
Third-Country managers
TCN managers are favoured by some companies because they offer unusual
flexibility of appointment: they are ‘foreign’ to the host country, yet they know
the policies and practices of the parent company through experience in other
assignments, and at headquarters. Often such TCNs are part of an international
cadre of global managers, highly skilled and multilingual, and able to be
assigned almost anywhere that the company needs them (Brooke 1988).
Foreign postings
In many cases, foreign postings require extensive investment by the
organisation and by the employee in learning a foreign language, and on
posting, working and living in conditions that are very different, and often far
less comfortable, than ‘at home’. Where the employee’s family accompanies
him or her, there is an extra burden for both organisation and for the employee,
such as where schooling, health and personal security are major issues.
Each of these factors requires the specific attention of the human resource
professional. For example, many organisations are now giving preference in
recruiting to graduates with modern languages. Others have well-developed
language programs for educating their potential expatriate managers in the host
country language and culture, not only to assist their effectiveness but also to
create a better impression of corporate ‘adaptation’. In Australia, languages
favoured by international organisations vary widely depending on their
operations, but frequently include Japanese, German, and Indonesian.
This is in contrast to the fact that up until the present decade, international
management has been an almost totally masculine preserve in Europe and
the USA. One study estimated that at least until recently, less than 3 percent
of North American expatriates were female (Adler 1986). The proportion
of women in the global expatriate pool is estimated to be about 5 percent
(Reynolds & Bennett 1991). Compounding the picture is the survey finding
that 45.8 percent of American, Australian, Canadian and European MNCs do
not employ women as expatriates (Reynolds & Bennett 1991).
An explanation given by some is that companies still shy away from using
female expatriates because of fears that women will not be accepted in
some countries, either socially, because of host culture attitudes, or as an
‘authoritative’ manager, as well as the disruption to the career of their partner
(Izraeli et al. 1980). A typically unstated reason is that women are still
discriminated against in much male decision-making, especially in regard to
business management (Dobbins & Platz 1986).
One of the reasons for a negative appraisal of the potential for female
expatriate managers is the tendency for organisations to confuse the role
of female expatriate with that of expatriate (female) spouse (Harris 1993).
However, the problems of adjustment experienced by the female expatriate
spouse are different from those faced by the female expatriate manager.
HRMT20022 - Module 2 - Page 22
Various reports indicate that Western female expatriates sometimes face
unique prejudice in Asian countries such as Japan, where a male culture
appears deeply entrenched. One 1996 study reported that only 10 percent of
a sample of 91 female respondents in Japan were ‘traditional’ expatriates, the
remainder being independent operators outside of organisational structures, or
accompanying partners (Taylor & Napier 1996).
Adler also commented that the ‘gaijin’ syndrome can be avoided by the
assumption that foreigners will always be treated as foreigners, and are not
expected to conduct themselves as host country women do. This is especially
so in countries where Western women are visually distinct, such as Japan.
Thus, ‘the cultural norms limited the access of local women to managerial
positions and responsibility do not apply to foreign women ... local managers
see women expatriates as foreigners who happen to be women, not as women
who happen to be foreigners. The difference is crucial.’ (Adler 1993, p. 54).
For all the rational arguments in favour of removing discrimination, the reality
appears to be that in some countries and cultures, women are seen as inferior
and subordinate to men, and foreign women still experience difficulties in
obtaining work visas to Arab countries (Adler 1993). Nevertheless, Adler’s
conclusion, based on her research, is that gender has no defensible basis as a
bar to international assignment.
While these areas are essential for evaluation in selection, it is also very
important to interview the family, especially with regard to their general ability
to adapt to foreign cultures, and to screen out those couples or families where
marital or emotional instability is potentially problematic for the applicants for
expatriation (Shilling 1993).
Other family matters requiring assessment include responsibility for aging parents,
chemical dependencies on the part of any family member, behavioural problems
in teenagers and their commitment to their current peer group and extracurricular
activities, and possible effect of expatriation on the spouse’s career. Just as it
is irresponsible and possibly unethical to send a family on assignment without
adequate preparation, so it is also negligent to send on international assignment a
family who by any known and validated criteria, is ‘unsuitable’. The consequences
of doing so may be highly significant and long-lasting.
1. Create a selection team. This should have at least three members, of whom
one should be a home country manager, one a host country manager, and
one a human resource management professional.
2. Define a strategic purpose for the global assignment. For example, if the
assignment is aimed at improving the control function between headquarters and
the overseas operation, and to improve coordination between the offices, then
the candidate should be assessed with special regard to experience and contacts
within the company. If a high degree of resourcefulness is required to work
in an organisationally or ethically ‘ambiguous’ environment, then perhaps an
experienced expatriate with demonstrated street skills and particular personality
attributes might be sought.
Review questions
Question 2–1
Question 2–2
Question 2–3
References
Adler, N 1986, International dimensions of organizational behaviour, PWS-
Kent Publishing Company, Boston.
Bartlett, C, Doz. Y & Hedlund, G (eds) 1990, Managing the global firm,
Routledge, London.
ibid.
Laabs, JJ 1991, ‘The global talent search’, Personnel Journal, vol. 70, no. 8,
pp. 38–42.
Munton, AG & Forster, N 1990, ‘Job relocation: stress and the role of the
family’, Work and Stress, vol. 4, no. 1, pp. 75–81.
Rugman, AM, Lecraw, DJ & Booth, LD 1985, International business: firm and
environment, McGraw-Hill, New York, p. 398.
Wheeler, KG & Miller, JG 1990, ‘The relocation of career and family factors
to the expressed minimum percentage pay increase required for relocation’,
Journal of Management, vol. 16, no. 4, pp. 825–834.
It is also regarded as being very useful for the expatriate to be briefed on the
way that corporate policy and practice in the international setting may differ
from that to which they might be accustomed in the home country. Some firms
offer the manager a brief ‘field trip’ for a week or two prior to the expatriate
assignment, to facilitate information gathering (job and family environment),
and to allay anxieties about the forthcoming posting.
Learning objectives
After studying this module, you should:
Even with all the possible training, the expatriate will still need in-post
support, such as regular up-dates from the organisation, communication about
expectations with constructive feedback about performance, and access to
emergency medical and psychological assistance is required (Harris 1989).
Most striking are those studies reporting that through CCT, expatriate failure
rates have been reduced to levels approximating 5 percent (Kohls 1985), and
in one case study of American firm Johnson Wax, only 2 percent (Caudron
1991). Regrettably, despite the desirability of CCT for expatriates, studies
indicate that as few as 32 percent of American expatriates are provided with
formal programs (Tung 1990). In Australia, such training is said to occur only
on an ad-hoc basis, and tends to be superficial in nature (Onto 1987).
1. self-awareness training (in which people learn about the cultural basis of
their own behaviour)
2. cognitive training (where people are presented with facts about other
cultures)
3. attribution training (where people learn the explanation of behaviour from
the point of view of people from other cultures)
4. behaviour modification (where people are asked to analyse the aspects of
their culture that they find rewarding or punishing)
5. experiential learning (where people actively participate in realistic
simulation).
Such training should include induction into the language, culture and religion,
history, and business environment, primarily, but should also include stress
management training. The social norms and courtesies should be addressed
in detail, as most cultures place great store by their formal and informal
rules (Copeland & Griggs 1985). Included also should be discussion on the
attitudes of the people in the targeted culture, regarding personality profiles
and information about their values and belief systems, as well as material
on how they tend to view foreigners. Details such as attitudes towards and
behaviour concerning cleanliness, sanitation, and personal habits, should
not be omitted. The differences between culture-general and culture-specific
training is that in the former, the training is given without specific targeted
cultures in mind, but rather on general differences between cultures and the
ways in which can adapt to them.
Levels of training
Most training programs use more than one approach, and combine didactic and
experiential approaches. Of course, predeparture training will always have an
air of unreality about it, since it may well be taking place in the comforts of a
familiar culture, divorced from the reality of what is to come. For this reason,
even though predeparture training is recommended, there is also a case to
be made for continuing it through to providing formal and informal learning
opportunities for the expatriate and his or her family after they have arrived in
post. Here, the training is likely to be much more specific and focussed—and
effective (Torbiörn 1982).
companies should give the expatriate’s spouse the same cross-cultural training
the employee receives ... While large portions of the training may be business-
related, much of it is applicable to the non-employee spouse, because cultural
values and norms that affect business behaviour also affect social behaviour
outside the workplace. Also, an understanding of the work challenges may
assist the spouse in offering support to the employee during the assignment
(Black & Mendenhall 1989).
The nature and kind of CCT for families should thus be matched with the
needs of the family concerned, and the particular culture and city to which they
are being assigned. As Hogan and Goodson conclude: ‘A family CCT program
can help ensure that the expatriate’s family becomes a positive rather than a
negative force on the overseas assignment’ (Hogan & Goodson 1990).
However, while the host-country national may move easily between both
host‑country and home-country cultures, it should not be thought that he or
she is necessarily free of the prejudice or ignorance that others might manifest.
Those host‑country nationals who have grown up in country with colonial
histories may still harbour private antipathies to the values and customs
of their former colonial masters, and such irrationality, especially when
encouraged by host-country fundamentalism, may prove dangerous in the
extreme, to the person concerned as well as to the organisation.
When the cost of such training is weighed against the likely benefits to the
commercial success of the operation, as well as its investment value in terms
of management development, it is a matter for surprise that all international
companies do not consider it important enough to fund routinely, as require of
staff as compulsory.
Summary
This module has examined some of the requirements for preparing employees
for expatriate assignments. It has considered the research and practice of
orientation programs, and in particular the role to be played by cultural
briefing, relocation briefing, and briefing on the organisational purposes for the
operation. Culture‑specific and task-specific training have been detailed, with
attention paid to the need for training for the ‘everyday’ stressors of living in
foreign environments.
Question 3–1
Question 3–2
What about underdoing the preparation? Would the expatriate have a legal
right to action against the firm if it failed to adequately prepare him or her,
given what the research says about the importance of preparation, and the
risks associated with expatriation?
Question 3–3
Question 3–4
Question 3–5
Question 3–6
How would you justify to an employer the need for expatriate preparation
programs?
Question 3–7
Question 3–8
References
Ali, AJ & Camp, RC 1996, ‘Global managers: qualities for effective
competition’, International Journal of Manpower, vol. 17, no. 67, pp. 5–18.
Laabs, JJ 1991, ‘The global talent search’, Personnel Journal, vol. 70, no. 8,
pp. 38–42.
Learning objectives
After studying this module, you should:
The starting point is that the performance appraisal should yield feedback on
the expatriate’s technical competence on the job—as specified by Tung as
a crucial variable predicting expatriate success (Tung 1981). With so much
else to deal with in an international assignment, it is expected that at least,
the expatriate is technically competent. The problem is that a performance
appraisal oriented excessively towards the assessment of technical competence
may fail to grasp the more subtle realities of expatriate operations.
Financial competence
Such data must also be viewed within the context of the cultural and economic
environment. Garland et al warn against the dangers of superficial comparisons
of data from different operations in different countries (Garland, Farmer & Taylor
1992). There is the further caution about the use of easily-available data: Reilly
and Campbell point out that the use of financially-based indicators in performance
measurement encourage a manager to devote personal energy and organisational
resources towards short-term optimisation, to the neglect of longer-term and
ultimately more important strategic issues (Reilly & Campbell 1990).
2. Cultural ‘distance’, based often on the region of the world (for example,
Western Europe, Middle East, Asia);
All of this means that the manager in the home-country is not always the
best person to offer the major input to the performance appraisal of an
expatriate. The process may better be accomplished by using information
from the host country management (including peers and subordinates), and
if possible, an appraisal involving a manager who has been an expatriate
in that assignment or country previously. Otherwise, the appraisal may be
limited to narrow considerations of the financial profit of the enterprise,
rather than more comprehensive and more useful appraisal of the
performance of the person.
Summary
In summary, performance appraisal systems face the enduring questions of
being fair and useful to the person and to the organisation. In international
operations, however, there are added considerations. The mere appraisal of
technical competence on the job is unlikely to be sufficient.
Question 4–1
Question 4–2
Question 4–3
Question 4–4
References
Bartlett, CA & Ghoshal, S 1989, Managing across boundaries, Hutchinson,
London.
Learning objectives
After studying this module, you should:
…‘basis for pay’, as the extent to which the individual, the job, work
experience, skills or performance, determine individual pay, and the relative
worth of jobs (Lawler 1990).
The principal problem is straightforward: Salary levels for the same job differ
among countries in which an MNC operates (Cascio 1989). This is usually
taken as a source of difficulty for parent company managers who believe that
the same remuneration (usually in home country currency) ought to be paid
to all staff doing the same job, without reference to their location. The logical
consequence is the further problem that fluctuating exchange rates require
constant attention in order to maintain constant salary rates in home country
dollars (Capdevielle 1989).
1. The policy should attract and retain employees who are qualified for
overseas service.
2. The policy should facilitate transfers between foreign affiliates and
between home-country and foreign locations.
3. The policy should establish and maintain a consistent relationship between
the compensation of employees of all affiliates, both at home and abroad.
4. The policy should maintain compensation that is reasonable in relation to
the practices of leading competitors.
It is important that within each MNC, a worldwide compensation system be
established, so that cultural variables can be dealt with systematically. Without
such an approach, expatriates are likely to feel dissatisfied with inadequate or
inappropriate compensation, and organisations are likely to expend resources
unfairly or extravagantly.
The following two principles have helped establish such systems in many MNCs:
Advantages Disadvantages
One of the most common additions to base salary is the foreign-service premium,
which typically ranges from 10 to 30 percent or more of base pay (Adkins 1990).
It is common for this premium to be offered tax-free. Its purpose also varies. In
MNCs that take a modular approach to international compensation, it represents
a combination of compensation for living away from the home country plus an
inducement to accept an overseas assignment. In this case, the percentage is usually
low. However, in MNCs that intend the expatriation premium to compensate for all
overseas problems, it is much higher.
Curiously, one’s ‘residency’ is not a question of where one lives during the income
year. A person could live overseas, visit Australia once each year, and be considered
a ‘resident’ of Australia. There is no one rule that determines ‘residency’ in every
case; rather it is a complex question including such factors as:
1. whether the person retains a house or apartment in Australia, for his or her use
2. the terms and conditions of the person’s employment overseas
3. whether the employee’s family accompanies him or her
4. whether the person is identified as departing Australia ‘permanently’ or
‘temporarily’
5. the extent to which the person retains assets in Australia.
Currency of remuneration
Some MNCs differentiate between their employees who spend only a brief
time in an international posting, with the majority of their careers spent in their
home country, as against those who for whatever reason, spend the larger part
of their careers serving away from their home country. In the former, salary
is usually paid in the denomination of the home country, and by arrangement,
made available locally to the expatriate, in whatever amount is specified.
The remainder may remain ‘at home’. Many expatriates with generous
international allowances (paid in host country currency), choose to live on
these, and retain most or all of their salary in their home‑country.
The equity problems that emerge with ‘home rate’ packages are obvious.
For example, an Australian working in Thailand may be being paid less
than the Americans reporting to him, because American rates are higher
than Australian. One alternative is to pay according to a unified scale for all
expatriates, regardless of country of origin. This maintains equity between
expatriates, and is seen as being internationally competitive. Benefits and
allowances can then be tailored to fit the circumstances of each assignment.
Benefits may vary greatly from one country to another. For example, in Europe
it is common for employees to get added compensation in proportion to factors
such as the number of family members or unpleasant working conditions. In
Japan, a supervisor whose weekly salary is relatively modest may also receive
benefits that include family income allowances, housing or housing loans,
subsidised vacations, year-end bonuses that can equal 3 months’ pay, and profit
sharing (Greene & Walls 1984).
Compensation on repatriation
There may also be a strong need for financial counselling for repatriates, to
advise them of changes that may have occurred in the home country during
their assignment, or perhaps to assist them in taxation and other financial
planning (Cascio 1989). Such counselling has the psychological advantage
of demonstrating to repatriates that the company is willing to help with the
financial problems that they may encounter in uprooting their families once
again to bring them home (Clague & Krupp 1978).
Review questions
Question 5–1
Question 5–2
Question 5–3
Question 5–4
References
Adkins, L 1990, ‘Innocents abroad?’ World Trade, October/November, pp.
70–76.
ibid.
Mercer, Cullen, Egan & Dell 1998, Managing staff overseas: international
remuneration and HR practice, Jackson Press, Sydney.
Learning objectives
After studying this module, you should:
The key role played by the expatriate’s family—in success and failure—also
deserves detailed attention. Even apparently minor concessions by the
organisation in support of the expatriate can have a major influence on family
morale and well-being. For example, access to a motor vehicle from the day
of arrival in the foreign country, so that the spouse is not unduly isolated,
along with advice on schooling and community services, are comparatively
inexpensive but very valuable forms of assistance. Of the four stages of
recruiting and selecting, orienting and training, on-site support, and re‑entry
counselling for the expatriate, Harris states that ‘the third stage, on-site
support, is the least understood but perhaps the most important part of the
process’ (Harris 1986).
In summary, the human and business-related costs of expatriation are such that
proactive companies ought to regard in-post support of their expatriates as both
normal and routine, ensuring performance and protecting their investment.
Having left their home culture and adapted to a new and often very different
culture on international assignment, many repatriates experience what has
been called, paradoxically, ‘reverse culture shock’ (Schuler et al. 1992). It is
estimated that 60 percent of repatriates experience significant reverse culture
shock (Black 1991).
The first phase of the adjustment might be considered to begin while the
expatriate is still in post, but anticipating the positives and negatives of the
repatriation that he or she knows is coming (Black & Mendenhall 1990). This
stage focuses on ‘predictive control’—trying to make sense of one’s future
The repatriates are bewildered when the old friends show little interest in
hearing of their exciting international experiences, and they are even more
dismayed when told, accusingly, ‘You’ve changed since you went away’.
The children of expatriates find it difficult to ‘join back in’ with their group,
where even the changes in the clothing fashions, and the essential slang that
denotes group inclusion, may have outpaced them. Indeed, the memories that
may have nurtured them throughout their assignment now seem to have been
self-delusory and a kind of punitive cynicism may become apparent. They may
be troubled by the thought that they have become strangers in their homeland.
Needless to say, this can be more than disturbing to some.
Organisations that give the repatriate low recognition and give the impression
that the employee is so far behind they are not useful, diminish repatriate
productivity. Thus the repatriate becomes dissatisfied and may leave the
organisation.
Part of the difficulty appears to be that the organisation, and often the
employee, treat the expatriate assignment as an end in itself, instead of a phase
in an integrated career plan. Some researchers recommend that agreement
about the position, level and location of the job to which the expatriate
will return on repatriation, should be reached prior to his or her going on
assignment (Adkins 1990; Clague & Krupp 1978). Indeed, Stroh et al suggest
that ‘closing the gap between expectations and the reality for expatriates
returning to their parent company increases commitment, helping to increase
the odds not only of retaining these valuable employees but also helping them
to make the often challenging adjustment to being home’ (Stroh, Gregersen &
Black 1998).
Relocation programs
Relocation, either within a country or internationally, is the common
experience for many employees. Coyle estimates that over 50 percent of
company executives can be expected to relocate at least once in their career
(Coyle 1988). With such financial costs involved, and with such potential
for problems, as well as for business success, it is perhaps surprising that
organisations appear to treat the matter of relocation without the kind of
sophistication reserved for other operations. It is gratifying that human
resource management is at last showing a considered approach to what
relocations mean for those staff undergoing them, and what they require in the
way of resources to be committed by companies (Gottsman 1984; Lullo 1992).
Bearing in mind the potential for distress to both individual and company, it
is hard to argue against expert assistance and sophisticated procedures being
applied in relocations of staff. Whether the services are offered within house,
or by a contracted external agency, or by a combination of the two, is a matter
for evaluation on a case-by-case basis, depending on the individual needs, the
company policy and extent of operations, and the level of human resources
management expertise within the company.
HRD is the integrated use of (a) training and development, (b) organisation
development, and (c) career development to improve individual, group and
organizational effectiveness (Mumma 1992).
In the international arena, it would seem logical that the principles and practices
of HRD are systematically applied to the task of developing the international
manager, and the manager who manages a multicultural workforce. Thus, cross-
cultural training fits within the culture-sensitive requirements effective human
resource development, since it opens the way for the formal treatment of cross-
cultural differences in areas such as aesthetics, attitudes and beliefs, religion,
material culture, education, language, societal organisation, legal characteristics,
and political structures (Ball & McCulloch 1992).
Also, designing and delivering training and development programs clearly needs to
take account of cultural factors. For example, some cultures appear to be typically
deductive in educational expectations; for a Western HR manager to approach
such a group with an inductive approach could lead to otherwise unjustified
questioning of his or her competence as a trainer. In short, it is not just the content
of human resource development programs that needs to be culturally sensitive
and collaboratively established, but it is also the process of how the program is to
be offered. The Westerner may need to carefully set about learning how he or she
is perceived in that role by host-country nationals, the better to contribute to their
development. Not knowing such fundamental but subtle information may lead to
outright failure of the best-intentioned programs. For example, it may take some
time for a trainer familiar with direct and clear feedback to become accustomed to
course participants who say what they think the trainer wants to hear, regardless of
their own thoughts on the matter or intention to carry out the plan being discussed.
Programs for cultural awareness in the workplace may have as their explicit
goal that of enhancing intercultural communication (often with increased
occupational safety and productivity as objectives). They are not likely to have
optimal impact unless they also seek to enhance understanding of one culture
by another. For example, it is difficult for Australians to appreciate the natural
reticence Japanese have about prolonged eye contact (which they see as
aggressive); Japanese often fail to grasp the Australian sense of humour which
delights in appearing to repudiate the family member or friend held in respect
and affection. Even the Australian use of the term ‘mate’ in a wide variety of
situations can be very confused to the uninitiated.
Summary
Global managers, who are often third-country nationals with extensive
experience in managing across borders and cultures, attain their status
and value to organisations through progressive exposure to training and
development as well as to their own history of working and living in a number
of cultures. They represent the highest-trained of the expatriates. They also
provide a valuable resource for the training and development of staff members
who are about to embark on an overseas posting as well as home office staff
who provide support to overseas operations.
Most expatriates, however, will experience both the challenges and the
frustrations of a small number of international postings, and will seek to serve
their organisations well while in post. With proper training and development,
their effectiveness and thus value to their organisations, can be increased
significantly.
Review questions
Question 6–1
Question 6–2
Question 6–3
Question 6–4
Question 6–5
References
Adkins, L 1990, ‘Innocents abroad?’ World Trade, October/November, pp. 70–76.
Lullo, J 1992, ‘Preparing for relocations’, HR Magazine, vol. 37, pp. 59–63.
Schuler, RS, Dowling, PJ, Smart, JP & Huber, VL 1992, Human Resource
Management in Australia, Harper Education, Sydney, p. 422.
Stroh, LK, Gregersen, HB & Black, JS 1998, ‘Closing the gap: expectations
versus reality among expatriates’, Journal of World Business, vol. 33, no. 2,
pp. 111–124.
Australia
Politics
The Australian political system has its foundations in the British Westminster
system of government. The Federation of Australia was formalised with the
Commonwealth of Australia Constitution Act in 1901, wherein the distribution
of powers between parliament, the states and the judiciary was enshrined.
From that period onward the distribution of powers vested in the various
bodies has contributed to a developed pluralist democracy that is envy of
many: in particular are the dynamics of power between unions, government
and industry. Over the years there has been two dominant federal political
groupings which have shared power: The Liberal Party–National Party
Coalition and the Australian Labor Party. There have been other minor parties
that have also been influential throughout Australia’s political history; some
of the minor parties have used their vote in the Senate (the upper house) to
influence industrial relations legislation and policy. It has been a fascinating
interplay of group dynamics as each group has endeavoured to achieve their
own individual political agendas. It has also been the catalyst for many
changes in the industrial relations (IR) sphere and has consequently generated
an interventionist need for HRM in industry.
Australian industry is now confronted with impending legislation that will facilitate
union involvement again in the workplace together with the abolition of the
Australian Workplace Agreements (AWAs) that can be replaced by ‘common law
contracts’. These changes will occur as the present government modernises industry
awards. Other factors that will impact upon how far reaching the changes will be
are, declining union membership, a change in the demographic profile of the labour
market, the changing nature of office and business structures. Union membership
has declined in concert with an ageing workforce, for example, union membership
for employees aged 25 to 34 have declined from 48 percent in 1986 to 15 percent
in 2006 (Editorial 2008). From this statistic a parallelism can be clearly drawn
between declining membership and power. The present government (which to a
considerable extent has been perceived as the political arm of unions) is also taking
a stronger position in relation to what might be considered inappropriate union
behaviour (Norington & Taylor 2007).
At the core of the labour market reforms is the need for organisations to
become more flexible and adaptable to the requirements of the marketplace.
Each organisation has an internal labour market, which is highly influenced
by a HRM system designed to organise the production and delivery of
goods or services. With the rapidity and discontinuity of change facing most
organisations in the 21st century, the internal labour market needs to be small
enough to be adaptive and flexible, while at the same time, having sufficient
core competencies to permit the organisation to move into new markets and
seize windows of business opportunity. A rigid, inflexible labour market, both
externally and internally, can prevent organisations from adapting to changed
circumstances rapidly enough. Smaller organisations, structured around
internal labour markets which have the appropriate mix of core competencies,
are relying on the availability of other smaller, adaptive organisations to
provide supplementary goods and services. Strategic alliances are becoming
more common and the boundaries between organisations are becoming less
distinct. Inflexible awards and third-party interventions are promoted as being
totally inappropriate. Thus both sides of the political fence have promoted
changes to the industrial relations system over the last two decades so that the
Australian labour market is more capable of competing in changing global
marketplace.
From the foregoing discussion it has become apparent that deregulation of the
Australian labour market has become the preferred approach of Governments.
Australia has moved away from a regulated labour market system towards a
deregulated IR system much closer to the global models of Australia’s trading
partners.
The increasing globalisation of financial and trade related activities has also
had an impact on the Australian economy. The rising cost of oil and its flow-on
effect into domestic commodity prices has contributed to rising inflation. The
CPI figure, in June 2008, was 4.5 percent; the highest in has been since 1995.
By June 1990 the rate had fallen to 3 per cent. Unemployment has also fallen,
from a peak of almost 11 per cent 15 years ago to approximately 6 per cent,
the lowest level since the 1970s. The effect has been an increase of monies
injected into the economy as a result of the resources boom that Australia
currently enjoys. Australia's trade balance turned to a surplus in June 2008 as
coal and iron exports jumped: Chinese demand for global iron ore imports has
increased from 11 per cent to 37 per cent in less than a decade. Paradoxically
Australian employers hired extra workers for a second month in July 2008; a
result of the expansion by mining companies. This has underpinned economic
growth, even as domestic demand slowed in response to a tightening monetary
policy. The resources boom tends to offset political predictions of a recession.
‘Australians also receive higher incomes as a result of higher resource
prices. As shareholders they experience higher profits. Employees in the
resource sector, as well as in the construction sector or the various areas that
supply goods and services to mining, are receiving larger pay packets. Even
governments are receiving higher revenue flows, which in some cases they will
spend, at least in part.’ (Stevens 2008). By June 2009 the reduction in private
employment had been moderated by state and federal government stimulus
packages and public works and training initiatives.
In the short term the dependence of Asian countries on Australian raw materials will
drive strong growth in supply in these areas for some time to come, contributing
to a continuing strong economy with commensurate quality lifestyles. The current
slowdown of growth in the US economy will moderate global growth prospects, but
not significantly in terms of Australia’s balance of trade payments (The Economist
2008). In the longer-term, a significant issue will be the impact of climate change
policies on Australia’s export capacity as a consequence of the climate change
initiatives presently being considered by the federal labor government.
Social
Immigration has been a strongly debated issue in Australian politics since the
colonial period. On one side of the argument, immigration provided Australia
with an instant workforce particularly during the developing years just after
WWII in 1945 and up to the 1970s. The new Australian’s as they were referred
to played their role in contributing to the high economic growth at the time.
However, there are a large number of social issues which have arisen since
then which affected the labour market and resulted in a number of legislative
interventions. The first of these is diversity in the workplace. Different ethnic
groups believed they were disadvantaged in various aspects of employment
opportunities the work participation rate varied across different ethnic groups.
However other factors were identified as contributing to ethic participation
in certain types of employment and these include: level of skills; settlement
patterns; education and proficiency in speaking/writing English.
The next significant social factor is the changing nature of the workforce.
Over the past two decades Australia has experienced a major industry based
shift in employment. The shift in manufacturing jobs offshore and the rise
of the service sector has reduced job opportunities for unskilled labour.
Changing technologies also add to this problem resulting in increased levels
of unemployment. Added to this is the increase in unemployment of older
members of the labour market even with high skill levels. There is also a group
within the unemployed which are categorised as ‘long-term’ unemployed who
have not worked for over 12 months. These unemployment issues are not
isolated to Australia but they identify a need for macro level changes to ensure
Australia has an appropriately skilled labour market for the future.
The final social issue is the anxiety levels across the society. Because of the rapidity
of change the last two decades, many employees have become more anxious about
the long-term employment prospects. This is aggravated by the loss of job security
in return for organisational commitment and loyalty. Within the labour market, this
‘change weariness’ has: motivated many young people to ‘drop out’ of the labour
market; many elderly people losing their life savings to survive their job loss until
the old-age pension becomes available; and to those in employment very resistant
to efforts by governments and organisations to create more flexible and adaptive
organisations able to complete internationally.
Physical
Australia is the driest continent and the current government came to power
on a platform of responding aggressively to the problems posed by ‘climate
change’. The vast majority of Australia is arid or semiarid and this percentage
is increasing as marginal farmlands are overstocked, grazed or cropped.
Timber reserves in Australia are down to less than 3 per cent of what they were
200 years ago. Some state governments have responded with a ban on tree
clearing which, while it is popular with many city dwellers, has alienated many
farming communities. Coupled with the environmental degradation of the land
is air, water and soil pollution. The situation is becoming so critical that more
and more Australians are demanding a cutback in economic growth to the level
they call ‘environmentally safe economic development’ or ‘environmentally
sustainable development’. Many development projects in mining, agriculture,
forestry and tourism are being held up or prevented by environmental pressure
groups using the legal system to reduce economic developments. These
environmental concerns, the degradation of natural resources and the lack of
capital to rectify the environment, are also having significant impacts on the
economy. People desperate for good paying jobs are brought into conflict with
other members of society who are concerned to save the environment from
further damage. Environmental concerns will be likely to increase in the future
and will affect HR policies and practices.
New Zealand
The development of HR practice in New Zealand has progressed along similar
lines to other western democracies. New Zealand’s colonial experience
in the 19th century naturally led to the adaptation of British practices
and assumptions in managing employment. We inherited the assumption
of inevitable conflict between labour and capital (DJB) and a number of
employment laws were enacted in the 1890s that would set the scene for the
next hundred years.
The last forty years have seen a significant shift in the nature of the
employment relationship. The Industrial Relations Act, 1973, The Human
Rights Commission Act, 1977, The Holidays Act, 1981, and The Wages
Protection Act, 1983, all sought to regulate the relationship between employers
and the labour market. This legislation legitimised the assumption of conflict
and enshrined in law the requirement to seek legal resolution to disputes.
The Trade Union movement thrived under this legislative regime, however
in 1989 The Employment Contracts Act (ECA) was passed into law. This Act
was a radical departure from previous approaches and enabled employees to
negotiate individual contracts with their employers. The result was a sharp
decline in Union membership and a virtual absence of industrial action. The
focus of the Act was on the rights of the parties involved and challenged the
polarising Marxist/capitalist assumption of inevitable conflict between labour
and capital.
The ECA was repealed by the incoming Labour government in 2000 and
the Employment Relations Act, 2000 was enacted. The Act has reinstituted
a focus on collective contracts, mediation based on the interests of the
parties and bargaining in good faith. The object of this Act is to build
productive employment relationships through the promotion of mutual
trust and confidence in all aspects of the employment environment and
of the employment relationship. The Act aims to do this by recognising
that employment relationships must be built on good faith behaviour; and
addressing an assumption of inequality between the parties to the relationship
in terms of bargaining power.
The Act promotes collective bargaining; and the protection of the integrity
of individual choice. It also sets out to promote mediation as the primary
problem‑solving mechanism with the aim of reducing the need for judicial
intervention. The Act promotes the observance of the principles established
by the International Labour Organisation Convention 87 on Freedom of
Association and Convention 98 on the Right to Organise and Bargain
Collectively.
Summary
Australia and New Zealand have a number of similarities in areas of
economics, cultural diversity, social institutions, and political structures.
This results in the practice of HRM in both countries being somewhat alike.
Probably the major difference however is the continued liberalisation of the
workforce structures with the unions having in increasingly minor role to play.
New Zealand however, with the Employment Relations Act, is attempting to
foster a perceived equal partnership between employer and employee. The
hope of such a political manipulation is to foster an environment in which
high-performance work systems can flourish.
Question 7–1
Question 7–2
Identify those HR policies and practices which, for Australia and a New
Zealand, are the most urgent in terms of reform. Which areas of HR
practices and policy are already developed?
Question 7–3
Question 7–4
References
Campbell, I & Brosnan, P 1999, Labour market deregulation in Australia:
the slow combustion approach to workplace change, International Review of
Applied Economics, vol. 15, no. 3, pp. 353 -394.
Editorial, 2008, State of the unions, The Weekend Australian, 2-3 August.
Morris, S 2008, ‘Union hits out over Gillard’s award plans’, The Australian, 4
February.
Norington, B & Taylor, P 2007, Rudd to expel second union boss’, The
Australian, 22 June.
China
Electronic journal article
Ding, DZ, Ge, GL & Warner,
The PRC has enjoyed 25 years of economic growth since Deng launched the M 2004, ‘Evolution of
Open Door policy in 1979. Since then it has also been lauded as a potential organisational governance
‘economic superpower’ by international bodies like the World Bank. By the in human resource
year 2020, some estimates suggest the PRC will become the second largest management in China’s
economy behind the USA. Living standards have risen greatly in recent years township and the village
enterprises’, International
but the distribution of economic benefits has been uneven with those living
Journal of Human Resource
in cities receiving higher economic benefits than those living in the regions. Management,, vol. 15, no. 4,
A new middle class has also emerged, particularly in Beijing and Shanghai as pp. 836–852.
well as many of the big eastern coastal towns and cities. (Search using the library’s
electronic resources page.)
Economic growth since the mid-1990s has continued to remain high but a
little less than in the previous decade. Whilst the management of the economy
has not been without its difficulties due to continuing corporate indebtedness,
especially in the state sector, and ongoing deflation in the market place, the
PRC has grown faster than most of its Asian neighbours, many of which have
not fully recovered from the 1997 financial crisis.
China is now much closer to a fully operative labour market than it was five
years ago. Under the ‘iron rice bowl’ system, mobility between firms was
close to zero. This situation gradually changed as the Dengist labour reforms
were introduced in the mid to late 1980s. Whilst one could earlier speak of
a ‘nascent’ labour market, it is now closer to a ‘real’ labour market in many
The 1997 Asian financial crisis did not have a significant impact on the
Chinese economy as it did with other Asian nations, especially on the overseas
Chinese business community. The main reason being the PRC was less closely
coupled with foreign companies in terms of both imports and exports. Of all
the Asian nations China had one of the lowest degrees of economic openness
in the mid-1990s. However, since the Asian financial crisis, the Chinese
economy has continued to grow with an average annual growth rate of 8 per
cent per the year 2000. Nevertheless unemployment is still a major concern.
The number out of work is estimated to be one in eight in many large cities;
joblessness may even be as high as one in five in parts of the ‘rust-belt’ in the
North East, and the official unemployment figure of around 3 per cent has long
been regarded as an underestimate.
Such political and economic changes in China had in turn impacted upon
people management practices. The lifetime employment mentality has a
lessening influence on management practices in China as well as other Asian
nations. Managers are allowed more autonomy, particularly in state owned
enterprises, in hiring and firing and other decisions relative to personnel issues
signifying a more decentralised model of employment practices. However,
outside of joint ventures and wholly owned foreign firms of a reasonable size,
it is not clear if the has resulted in a full-blown HRM model. Studies have
shown that size, ownership and location, are important factors in determining
how people are managed in Chinese firms. It is more likely that HRM is
implemented in larger firms as opposed to small ones; more likely to be seen
in the south than the north; and more likely to be practised in jointly owned or
wholly foreign-owned businesses.
Summary
Since the start of Chinese economic reforms in the late 1970s management
practices have changed dramatically. Characterised by high economic growth
over more than two decades, it has become a ‘magnet’ for international
production and investment. However, movement to a market orientated
economy, a multi-ownership system, and an emerging new labour market has
intensified the pressure on the government, trade unions and enterprises, as
well as on individual workers to find ways of surviving from year to year. It is
still unclear as to what impact HRM practices will have on the future direction
of employee management in China.
Question 8–1
Question 8–2
Discuss how the challenges and opportunities presented by the 1997 Asian
financial crisis are changing the practice of HR within China.
Question 8–3
Read the case study ‘BOL China’ in your book of readings and answer the
following questions:
References
Cooke, FL 2004, ‘HRM in China’, in Managing human resources and Asia-
Pacific, PS Budhwar (ed.), Rutledge, London.
Ding, DZ, Ge, GL & Warner, M 2004, ‘HRM in China after the Asian financial
crisis: beyond the state sector’, International Studies of Management and
Organisation, vol. 34, no. 1, pp. 10–31.
Fernandez, JA, Wang, JZ & Chen, C 2002, ‘BOL China’, Asian Case Research
Journal, vol 7, no. 2, pp. 115–144.
Learning objectives
On completion of this module you should be able to:
Japan
Electronic journal article
After the end of World War II in 1945, the Japanese economy recovered and Dalton, N & Benson, J 2002,
grew quickly supported by an annual economic growth rates of around 10 per ‘Innovation and change in
cent for the next 25 years. From 1970 the real GDP growth averaged around 5 Japanese human resource
management’, Asia-Pacific
per cent and this continued for another 20 years. This period was characterised Journal of Human Resources,
by declining real GDP growth and a series of economic cycles. Unemployment vol. 40, no. 3, pp. 354–362.
was low, ranging between one and two percent during the 1960s and 1970s, (Search using the library’s
and a slightly higher two to three percent during the 1980s. In this strong electronic resources page.)
economic environment, firms concentrated on expanding market share, and
management were able to encourage and support a range of HR practices Dedoussis, V 2001, ‘Keiretsu
and management practices
such as lifetime employment supported through seniority wage and promotion and Japan—resilience
practices. amid change’, Journal of
Managerial Psychology, vol.
Since 1992, the Japanese economy has alternated between periods of recession 16, no. 2, pp. 173–188.
and low economic growth. For any economy based on, and accustomed to, (Search using the library’s
high-growth, this economic downturn has had a serious effect on employment electronic resources page.)
which in turn has had an impact on Japanese HRM principles and practice.
These changes have occurred for a number of reasons. Firstly, the breakdown
of the keiretsu (inter-firm network) system of cross shareholding in preferential
trading among the big corporations has badly hurt the safety net of supporting
the long-term growth strategy of Japanese firms and consequently their ability
to protect employees from downside market rises.
Changing economic conditions has also begun to challenge the long held
important practice of pay and promotion being underpinned by seniority and
not merit. People would be employed at the base level, usually young and
recent graduates from universities or higher level education institutions, and
their progression through the business was based on seniority. This practice
has continued for a long period and was designed as a motivational tool for
employees in developing high levels of organisational commitment. This
system is now under pressure and younger employees do not see why they
should wait for promotions if they have superior skills and abilities. Thus
many bigger organisations are seeing a rise in turnover rates especially at the
lower and middle levels resulting in a reduction of necessary organisational
skills. More recent HRM strategies to combat this exodus of talent has been
the introduction of sophisticated tests and other screening devices to select
high‑quality recruits.
Since the early 1990s, some companies have developed a system of job
ability based wages focusing individual work performance over one year.
This system is quite close to a true performance based pay system. It has
been termed ‘annual salary system’ and has been introduced by about 10
per cent of large companies and is primarily used for managers and general
managers. The monetary benefits to employees are however, typically small.
In addition, companies are now beginning to recruit mid‑career employees to
enhance the existing skill base within the organisation. The number of part-
time and temporary workers has also increased to be about 25 per cent of the
total workforce. This growth has lead to a less stable workforce and partly
underpins the record unemployment level now being experienced.
Summary
Important changes have occurred in Japanese HRM. First, wage settlements
are becoming more disparate and are linked to the nature of employment.
Second, there has been a gradual shift towards a merit-based appraisal system
for wages and promotion in Japanese companies. Third, there has been a clear
departure from age and tenure as key criteria for wages and promotion. Whilst
this has been a trend for the past two decades, the process has accelerated over
the past five years. Finally, there has been a general restructuring of HRM with
the speed of change substantially increasing. What may have been considered
unique practices five years ago have now become more widely established.
Nevertheless, HRM reform is still seen ostensibly as the label of practice and
experimentation. There is little indication that the change is systematic or has
occurred at the policy or architectural level.
Review questions
Question 9–1
Question 9–2
Question 9–3
Question 9–4
Compare and contrast HRM practices appropriate for the older workforce
in Japan this is those practices that are appropriate for the new generation
of worker in Japan.
Learning objectives
On completion of this module you should be able to: Resource Book
Reading 10–1
•• identify and outline the social, political and economic systems of Thailand Ananvoranich
& Tsang 2004
•• outline the cultural dimensions which contribute to the various HR pp. 83–103.
practices and policies of Thailand
•• discuss the strengths and weaknesses of the practice of HRM in Thailand
•• identify the contribution of political, economic, social, physical and global
factors in the economic progress currently being experienced by Thailand
•• outline the development of HRM practices in Thailand and the
involvement of the government Electronic journal article
Browell, S 2000, ‘The land
•• discuss the impact of diverse cultural and religious values on HRM of smiles’: people issues in
practices and principles in Thailand. Thailand’, Human Resource
Development International,
vol. 3, no. 1, pp. 109–119.
Thailand (Search using the library’s
electronic resources page.)
Prior to recent economic problems eventuating from the 1997 economic crash,
Thailand was widely perceived as one of the most promising ‘new tigers’ in Kamoche, K 2000, ‘From
Southeast Asia. In the 1980s and early 1990s, the economy experienced highly boom to bust: the challenges
impressive growth rates of 8 per cent and above. Rising standards of living of managing people in
coupled with an unprecedented spirit of consumerism fuelled economic growth Thailand’, International
as well as shift away from an agricultural focus to an industrial one with an Journal of Human Resource
Management, vol. 11, no. 2,
emphasis on consumer products, financial services and property speculation. pp 452–468.
Economic liberalisation, unbridled foreign borrowing, foreign direct (Search using the library’s
investment and a state led drive to promote exports further contributed to electronic resources page.)
economic and industrial success. Within a decade the country was transformed
into a vibrant, rapidly industrialising new tiger economy.
There are huge differences in the level of development between the Bangkok
Metropolitan area and most of the rest of Thailand. Bangkok enjoys the level of
development comparable to Singapore, yet Thailand as a whole has a surplus labour
economy with extensive poverty in many parts of the country. Although Thailand has
had a succession of ‘five-year plans’ to address economic development and Boards
of Investment to guide their development, much of the very substantial growth
that has occurred has been fairly chaotic and not well integrated. Overinvestment,
particularly in real estate, played a significant role in the economic crash of 1997.
HRMT20022 - Module 10 - Page 89
The country's ability to respond to the demands of globalisation is also
limited by a poorly developed human resource base, with education being
of significant importance. Most people have some level of formal education,
but a greater majority of Thais have only completed primary school. Thai
educational attainment is much lower than that of the least developed
countries in the region (e.g., Vietnam, Indonesia). Though devastated by
the 1997 financial crisis—which had its origins in Thailand—Thailand
has been experiencing a slow but steady economic recovery beginning in
2001. Nonetheless, there is still considerable unemployment and continuing
economic distress especially in areas outside of the capital.
The less educated Thai labour market has meant that the strategies
implemented by countries such as Korea, Taiwan and Singapore in responding
to globalisation (i.e. movement towards less labour intensive and more
sophisticated technologies) are not so readily available to Thailand. Therefore,
HR strategies aimed at improving flexibility in Thai organisations could be
expected to be thwarted by educational deficiencies and the prevalence of
traditional Asian cultural values, such as high‑power distance, fatalism and a
strong preference for harmonious social relationships.
Although Thai culture has certainly been influenced by the rapid growth
experienced in the 1980s and 1990s, Thailand remains a reservoir of more
traditional values, especially among the rural people that are often drawn
into the industrial workforce. Thailand is not fundamentally a Confucian
culture (though Confucian values have influence through the Chinese
business community); as the dominant religion is Theravada Buddhism, an
older and more traditional form of Buddhism than that Mahayana Buddhism
of Taiwan, Korea and Singapore. Connections to Indian culture mean that
Hindu beliefs also still have an influence within Thailand. Class distinctions
are often quite pronounced and rooted in prescriptive criteria. Thailand has
more of an English style class system (supported by the continuing existence
of the monarchy and royal titles). Class lines can be crossed, but not without
difficulty. The society, then, is collectivist and hierarchical, characteristics very
much reflected in Thai approaches to management. The quintessential Thai
manager is paternalistic, combining both authoritarian and more benevolent
styles of leadership. Authority relationships are very important in Thai society,
including those in the workplace.
Review questions
Question 10–1
Question 10–2
Question 10–3
Question 10–4
References
Ananvoranich, O & Tsang, EWK 2004, ‘The Asian financial crisis and human
resource management in Thailand’, International Studies of Management and
Organization, vol. 54, no. 1, pp. 83–103.
•• outline the cultural dimensions which contributed to the various HR Reading 11–2
practices and policies of India Panda & Gupta 2002
pp. 129–166.
•• discuss the strengths and weaknesses of the practices of HRM in India
•• identify the contribution of political, economic, social and global factors
to the prosperity currently being experienced by the people and workers of
India
•• discuss the impact of diverse cultural and religious values on HRM
practices and principles in India. Electronic journal article
Budhwar, P 2003,
India ‘Employment relations and
India’, Employee Relations,
Upon independence from British colonial rule in 1947, India placed its faith vol. 25, no. 2, pp. 132–148.
(Search using the library’s
in centralised economic planning and built a command economy which had electronic resources page.)
few parallels outside the Soviet bloc. Industrial enterprises were protected
from external competition by territories and outright prohibition of imports, Budhwar, PS & Baruch, Y
and from each other by the policy of industrial licensing. The public sector 2003, ‘Career management
in particular could not fail as it was thought to serve the social rather than an practices and India:
economic purpose. an empirical study’,
International Journal of
Manpower, vol. 24, no. 6,
This approach prevailed until 1991 when double digit inflation lead to high pp. 699–719.
rates of borrowing and a lower level of foreign exchange reserves. As a result, (Search using the library’s
the World Bank and the IMF agreed to loan India money on the condition electronic resources page.)
the country changed to a free market economy. Evidence suggests that the
associated reforms have resulted in India now being considered as one of the
largest emerging economies.
With India now facing competition resulting from a free market economy
many enterprises are challenging the above norms. Even within a changing
business environment, Indian industrial relations are still based primarily
on an essentially adversarial culture, with little sustained effort by labour or
management to look for an alternative model, which is the opposite to the
western systems of Australia and New Zealand.
Summary
Like the majority of countries explored in this course, India also faces changing
economic, social, and political systems. However, India seems somewhat slower
to introduce what western owned MNCs would see as effective human resource
management practices and policies. This is primarily due to the strong influence of
an established unionised labour market. Within such a system that is underpinned
by high levels of formal and legalised protection for employees, companies find it
difficult to convince unions of the importance of HRM strategies. Rather, the Indian
workforce appears to be more open to human resource development initiatives,
particularly those at management levels.
Question 11–1
Question 11–3
Outline and provide a justification for five HRM practices that a HR
professional might use which leverages off the caste system in India.
Question 11–4
What sorts of career management strategies might be effective in India? Why?
Question 11–5
How might increasing liberalisation and global competition change employment
relation practices within Indian enterprises over the next five years?
References
Budhwar, P 2003, ‘Employment relations and India’, Employee Relations, vol.
25, no. 2, pp. 132–148.
Learning objectives
On completion of this module you should be able to: Electronic journal article
Rowley, C, Benson, J &
•• identify the positive and negative effects of globalisation on HRM. Warner, M 2004, ‘Towards
an Asian model of human
•• discuss similarities and differences in the practice of HRM in a global resource management? A
context rather than a regional (Asian or Australasian) context. comparative analysis of
China, Japan and South
•• identify how the practice of HRM has changed globally and in the Asia- Korea’, International
Pacific through the integration of global markets by MNCs. Journal of Human Resource
•• discuss where the convergence of HRM practice lies between East and West Management, vol. 15, no. 4,
pp. 917–933.
•• discuss the implications of changes in HRM practices on labour (Search using the library’s
productivity and flexibility. electronic resources page.)
Over the last few decades the integration of world economies into a single
huge marketplace has resulted in a growing awareness of the need to ensure
that consistency in HRM provides stability in multinational organisations as
they spread across the globe.
While there has been much made about negotiating the cross-cultural
minefield when setting up joint ventures, and strategic alliances with MNCs
and SMEs at the management level the importance of cross cultural diversity
and its impact when managing HRM functions needs to be recognised: For
example, the Cameron Macintosh musical production of Miss Saigon has
played to 18 countries, in nine different languages throughout the world. It
included countries such as China, Singapore, Scandanavia, the UK and USA.
Managing and applying HR functions across such a multiplicity of legal,
political, cultural and religious factors would challenge any HR department
involved in strategic functions such as recruitment and selection, training and
development, remuneration and industrial relations.
Changes are not confined to China or the Asia Pacific Basin per se: Research
shows that South Korean firms are breaking with tradition and experimenting
with western style HRM practices, in which ‘firms which keep traditional
HRM characteristics have maximised the advantages of Confucian values
and have been able to adapt performance based HRM in their own way’
(Choi 2004 cited in Miles 2008, p. 39). Indeed, while Australia finds itself
geographically located in the Asia Pacific basin its traditional links with
Great Britain have been severely tested with operations in the global market.
So much so that from its HRM foundations formed from British principles
and law an emergent philosophy of HRM is now influenced by its own
multicultural population. Other examples of the western influence on HRM
can be identified in research by Tokoro (2005), who discusses the changing
nature of HRM practices in Japan. From its post war growth period in the
nineteen fifties, with its HRM practices congruent with its culture, Japan has
seen a change in HRM architecture and practices in the nineteen nineties
due to encroachment of western capitalist principles. Further evidence of
the changing nature of HRM can be found in Namazie’s research into joint
ventures operations with Japanese, UK, Danish, Korean, French and Korean
partners, whose study on the impact of transferability of HRM can be impacted
upon by ownership and control of critical resources, the compatibility of
national culture and socio-cultural differences, mutual trust and respect
between partners and the compatibility of management styles. (Namazie
2003).
On the other hand, if more radical reform is undertaken and extended to all
levels of HRM, then it is likely that, in the transitional period, HR practices
will also be affected making HRM more uncertain and difficult to manage.
Workers may be alienated in this process and companies may not be able
to appeal to the wider norms and values of society to gain the necessary
commitment.
The final issue therefore relates to the development of HRM theory for the
Global as well as Asian context. The countries explored within this course
raise a number of issues that will need to be incorporated into any broad theory
of HRM. In particular, hybrid systems (Korea), multiple approaches (Japan),
external and internal HRM (China), the superficial and paradoxical nature of
change, will all need to be considered.
Summary
This module suggests that HRM thought and practice is evolutionary. This
is as much a result of globalisation as the 1997 Asian financial crisis, and
the current Global Financial Crisis. There is some evidence of HRM being
practiced through varying HRM functions similarly to that seen in the western
world: however this is seen mainly within western owned MNCs. There is also
ample evidence of HRM practices being adapted to take into account the social
and political context of the individual countries. Consequently, this means any
generalised model of HRM must be based in context rather than on prescribed
outcomes, able to incorporate a multiplicity of approaches, and to recognise
the dynamic and inherently unstable nature of HRM. New models of HRM
must also accommodate the various levels at which any system operates and
develop clear linkage between these levels. Equally important is the need to
have less focus on convergence as a measure of HRM adoption and the need to
place more attention on how systems develop and change to accommodate the
various cultural, institutional and macro economic forces.
Question 12–1
Question 12–2
Discuss the impact of the Asian financial crisis on the practice of HRM in
the Asia-Pacific region.
Question 12–3
Question 12–4
Draw a conceptual model that outlines how you understand the emerging
Asian model of human resource management.
References
Belout, A Dolan, SL & Saba, T 2001, Trends and emerging practices in human
resource management, International Journal of Manpower, vol. 22, no. 3,
pp. 207-215.
Burton, JP, Butler, JE & Mowday, RT 2003, ‘Lions, tigers and allocates:
HRM’s role in Asian business development’, Human Resource Management
Review, vol. 13, pp. 487–498.
Chiu, RK, & Luk, VW-M, 2002, Retaining and motivating employees,
Personnel Review, vol. 31, no. 4, pp. 402-431.
Murray, P 2005, Australia and the European Superpower: engaging with the
European Union, Melbourne University Press, Carlton.